Paris: Automaker PSA Peugeot Citroen on Wednesday posted a €962 million ($1.37 billion) net loss in the first half as the global economic crisis continued to ravage car sales and said it doesn’t expect the European car market to recover before the end of next year.
The loss compares to a €733 million profit a year earlier.
The maker of the Peugeot 207 and Citroen’s C4 Picasso said it expects to remain loss-making this year, after already losing €343 million in 2008. The company is shedding jobs and replaced its chief executive in March in a desperate bid to face off the wost crisis the car industry has faced in decades.
The “first half results reflect the impact of adverse conditions in the European markets, which were only partially mitigated by the benefits from performance action plans and new model launches,” CEO Philippe Varin said in a statement.
The former steel industry executive took over from Christian Streiff after reports that Streiff had lost the confidence of the Peugeot family, the company’s founder and largest shareholder.
France’s largest auto maker said incentives for scrapping old cars for new, less-polluting models in some European countries gave a needed boost to lagging car sales and led to increased production in May and June.
European manufacturers’ group ACEA reported a 2.4% rise in European car sales in June, the first increase after 14 months of falling sales, thanks to government “cash-for-clunkers” handouts.
It said sales at Europe’s top seller Volkswagen AG rose 9.5%, while Italy’s Fiat SpA saw a 11.7% gain as its cheaper small cars sold strongly. Peugeot Citroen sales increased 4.4%, Ford Motor Co. rose 2.2% and Renault was up 3.4%.
Peugeot Citroen repeated a 23 June warning that it expects to record a recurring operating loss this year of between €1 billion and €2 billion.
It expects the European automotive market will decline by around 12% this year, with a 7% drop in the second half.
Recovery “should take place toward the end of 2010,” Varin said.
In the first half, the recurring operating loss was €826 million compared with a profit of €1.115 billion in the same period of 2008.
Revenues fell 21.8% to €23.497 billion from €30.066 billion a year earlier.
Peugeot Citroen’s automotive division and car parts supplier Faurecia were hardest hit, whereas the Banque PSA Finance arm “has shown good resilience,” the company said.
The company said it spent €294 million in the first half on restructuring charges mainly from its voluntary redundancy plan.
The carmaker plans to cut 11,000 jobs this year, after losing 18,000 jobs — about 10% of the work force — since the start of its turnaround plan two years ago.